Ex-Bond Trader At Kidder Sues

Published: April 29, 1995

Joseph Jett, the former bond trader at Kidder, Peabody & Company, has filed a lawsuit accusing Kidder; its former parent company, the General Electric Company, and others of libel and slander.

Kidder dismissed Mr. Jett last April, charging that he had created $350 million in phony profits for the firm and himself. The trading scandal for which Mr. Jett has been blamed helped precipitate G.E.'s decision to sell the firm's assets to the Paine Webber Group.

The suit, which was filed on Thursday in New York State Supreme Court in Manhattan, named G.E.'s chairman and chief executive, John F. Welch Jr.; Kidder's former fixed-income chief, Edward Cerullo, and the Securities and Exchange Commission's former enforcement director, Gary Lynch. The suit is seeking $50 million.

Mr. Lynch, now practicing law outside government, directed a 15-week internal investigation into Mr. Jett's activities. The 85-page report found that Mr. Jett acted alone, creating false profits by taking advantage of a failure in the firm's accounting systems for trading in zero-coupon government bonds.

Mr. Jett also sued Mr. Lynch's law firm, Davis, Polk & Wardwell.

In addition to the libel and slander charges, the lawsuit accuses the defendants of infliction of emotional distress, abuse of process and conducting a "continuing campaign and conspiracy."